The cryptocurrency market has been buzzing with activity, and one of the most significant indicators of its bullish sentiment is the put-call options ratio.
This ratio, particularly in the Bitcoin BTC -0.11% market, has been a reliable indicator of market sentiment. A recent statement from Luuk Strijers, the Chief Commercial Officer of Deribit, a leading derivatives exchange, highlighted the bullish nature of the current market.
Approximately $4.5 billion worth of options were set to expire on the Deribit platform, and the prevailing put-call options ratio stood at a bullish 0.49.
The put-call options ratio is a metric that traders and analysts use to gauge market sentiment. When the number of outstanding call options (bullish bets) exceeds the number of put options (bearish bets), the ratio falls below one, indicating a bullish sentiment in the market. Strijers emphasized that the current ratio on Deribit suggests a strong bullish sentiment, with the ratio standing at 0.49.
Beyond the put-call options ratio, other metrics also suggest a bullish market. One such metric is the skew for call prices compared to puts. When calls are more expensive than puts, it indicates increased demand for calls, which is another bullish signal. Strijers also pointed out the increasing basis, the difference between futures and spot prices. This increase indicates that traders expect contracts that are about to expire to settle at higher levels than the current spot prices.
The crypto options market has been booming, with the notional open interest of Bitcoin and Ether options on Deribit reaching a staggering $20.64 billion. This figure is close to the peak registered in November 2021 when Bitcoin traded above $66,000. The current open interest suggests a significant growth in the market and an increasing interest in options trading.
Deribit dominates the global crypto options market, controlling 90% of the activity. The exchange’s influence means that its metrics and data provide valuable insights into the broader market sentiment.
Another exchange, Binance, showed contrasting leverage trends. While Deribit’s estimated leverage ratio stood at an all-time high of 0.86, Binance’s ratio was at a year-to-date low of 0.16.
High leverage can amplify potential gains, but it also increases the risk of significant losses, especially in volatile market conditions. Traders on Deribit seem more comfortable with high levels of leverage, suggesting a bullish sentiment or a higher risk appetite.
